As virtual machines become more and more important for companies, so do their file format. Virtual machines using Microsoft technology use a format called VHD or Virtual Hard Drive. Without specialized tools or a running virtual machine, a VHD file is essentially a black box.
To address this, VHD files will be natively supported by Windows 7 just like any other disk drive. VHD files can be mounted with either the command line tool Diskpart or via the Disk Management MMC snap-in. Drives can also be created and partitioned using these tools.
For developers, programmatic control is achieved through the VDS Interfaces. These are COM interfaces are part to the Virtual Disk Service, the underlying API Windows uses for most volume and disk management features.
On the standards side, VHD files are under the the Microsoft Open Specification Promise. This has led to support from products and companies such as Citrix’s XenServer hypervisor and Sun’s VirtualBox.
You can learn more about VHD Support in Windows from Bart De Smet's blog.